In a humiliating blow for Iain Duncan Smith’s flagship back to work programme, one of the largest investors have announced they are selling their stake in the scheme.
Tax dodging specialists Deloitte own half of Ingeus, one of the welfare-to-work companies who are contracted to carry out the disastrous Work Programme. They are now selling that stake and pulling out of the sector altogether.
This decision comes despite George Osborne’s announcement of a quarter of a billion pound hand out to the welfare-to-work sector as part of his upcoming mass workfare scheme. It suggests that all is not well in the welfare-to-work sector.
Back in the glory days of welfare-to-work unemployment was steadily falling due to a long period of economic growth. Welfare-to-work companies made billions on the back of this, convincing a succession of clueless Labour ministers that this was all down to their wonderful job search training. The idea that unemployment was caused by unemployed people, who just needed to be fixed, was well and truly established. The reality, as anyone who ever attended one of their schemes knows, was that these companies simply picked up job outcome fees every time anyone found a job under their own steam.
As soon as the economy started to dip suddenly all these job outcomes began to disappear. This didn’t stop Iain Duncan Smith falling for the racket hook, line and sinker and announcing a £6billion pound Work Programme to be run by these parasites.
Companies like A4e, Ingeus, G4S and Serco flocked to bid for Work Programme contracts, with hugely optimistic promises of success. That success never materialised and the payment-by-results model has meant that this tax payer funded hand out has not brought the huge profits expected by the likes of Deloitte who had invested so heavily in the programme.
Only Iain Duncan Smith could turn a licence to print money into a liability for the companies involved in his endless crazy schemes which do little more than bully and humiliate claimants unable to find a job. But by designing a succession of back to work schemes which are undeliverable in practice and have no impact on whether people get back into work he may have managed what seemed impossible and broken the welfare-to-work sector.
Ingeus will remain in business for now, with rumours that Serco may buy Deloitte’s stake. They are almost certain to bid for contracts in the recently announced tender for ‘Community Work Placements’, the latest fantasy scribbled down by George Osborne on the back of an envelope which will see up to two hundred thousand people forced to work unpaid for six months. But this scheme contains a very real hidden liability for welfare-to-work firms.
Community Work Placements have already been piloted and proved to be a disaster. The companies involved were only able to find 63% of participants a placement. Under George Osborne’s plans, if the companies involved cannot find a placement for claimants then they will have to provide full time job search instead. This will lead back to the bad old days of Tony Blair’s New Deal when thousands of people were forced to sit around in the offices of welfare-to-work providers twiddling their thumbs because there were not enough workfare placements available. But this time round, presumably in an effort to encourage companies to focus on finding people workfare rather than real jobs, the welfare-to-work companies won’t be paid for this. They will only get paid when someone starts on workfare.
This astonishing twist shows that it is now more important to this Government that unemployed people are punished with unpaid work then they actually get a job. And there isn’t even enough workfare to go round, let alone real jobs. So welfare-to-work companies bidding for the latest scheme are likely to be plunged into financial chaos as they are forced to warehouse tens of thousands of people out of their own pockets.
The smart operators in welfare-to-work got out whilst the going was good – like ex A4e boss Emma Harrison, the UK’s biggest benefit cheat who made millions on the back of workfare and benefit sanctions. Now Deloitte are following suit, and they are a company that knows a thing or too about financial scams. Despite the bungled attempts of this Government to keep the whole shoddy racket afloat, it seems that the future is far from rosy for the corporate poverty pimps in the welfare-to-work sector.
